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JANUARY 2021
Global Dairy
UPDATE
Our Markets Our Performance
• December production in New Zealand flat • Darfield site adds new shift to meet cream cheese demand.
on last year. Australia monthly production
flat. US and EU monthly production
increased relative to last year.
• New Zealand and Australia exports
increased in November. EU and US
monthly exports down.
Our Co-op
• China imports continue to increase and
Latin America monthly imports also up. • Promising plantain trial looking good for the planet.
Decline in Middle East and Africa and
Asia imports.
• Fonterra’s season-to-date New Zealand milk
collection reached 902.8 million kgMS at the
end of December, down 0.7% on last season.
• Fonterra's Australia milk collection for
December increased 1.3% to 11.4 million kgMS,
but was down 2.2% for the season to date
relative to last season.
Key Dates
28 February 2021 17 March 2021 20 April 2021 May 2021
Final Date for Application to FY21 Interim Results Share Standard Compliance FY21 Q3 Business Update
Supply Fonterra Announcement Date for 2020/21 Season
1
OUR MARKETS
Global Production
December production in
New Zealand flat on last
year. Australia monthly
production flat. US and EU
To view a chart that monthly production
increased relative to last year
illustrates year-on-year
changes in production –
CLICK HERE
NEW ZEALAND AUSTRALIA EUROPEAN UNION/UK USA
0.7 %
Change for December 2020
0.0%
Change for November 2020
1.1%
Change for November 2020
3.1%
Change for December 2020
compared to December 2019 compared to November 2019 compared to November 2019 compared to December 2019
0.4%
Change for the 12 months
3.0%
Change for the 12 months
0.8%
Change for the 12 months
2.1%
Change for the 12 months
to December 2020 to November 2020 to November 2020 to December 2020
New Zealand milk Australia milk EU (including UK) milk US milk production
production¹ was relatively production was flat in production increased by increased by 3.1% in
flat in December compared November compared to 1.1% in November compared December compared to the
to December last year November 2019. Warm and to the same period last year. same period last year.
increasing 0.7% on a litres wet weather continued to
The increase in production December saw continued
basis (up 1.0% on a milk improve pasture growth
was observed across key strong production volumes
solids basis). through spring though smaller
producing countries such as farmers drive higher milk
Following a 2.5% drop year- herds, a drop in farm numbers
as Ireland (up 8.6%), Italy per cow yields and herd
on-year in November driven and labour challenges
(2.0%), UK (1.9%) and sizes. There is some concern
by challenging weather impacted milk production
Poland (1.5%). This increase that this sustained growth
conditions, milk production growth. Dairy Australia was partially offset by a rate will lead to pressure on
growth has improved in expects milk production to continuing decline in France processing capacity during
December as milder and track towards the lower end and Germany. spring peak.
drier weather settled in. of the current 2020/21 growth
New Zealand milk range of 1-3%. EU milk production for the Milk production for the
production for the 12 months Australia milk production for 12 months to November was 12 months to December was
to December was also the 12 months to November up by 0.8% compared to the 2.1% higher compared to the
relatively flat on last year at was 3.0% higher than same period last year. same period last year.
0.4% higher. last year. Fonterra collections
Fonterra collections are in Australia are reported
reported for December, see for December, see page 5
page 5 for details. for details.
1 New Zealand production is measured in litres.
Note: 2020 production numbers include one extra day of production in February as 2020 was a leap year.
2
OUR MARKETS
Global Exports
New Zealand and Australia
exports increase in
November. EU and US
monthly exports down
To view a chart that
illustrates year-on-year
changes in exports –
CLICK HERE
NEW ZEALAND AUSTRALIA EUROPEAN UNION/UK USA
8.7%
Change for November 2020
6.9 %
Change for November 2020
9.5%
Change for October 2020
3.1%
Change for November 2020
compared to November 2019 compared to November 2019 compared to October 2019 compared to November 2019
2.3%
Change for the 12 months
2.2%
Change for the 12 months
2.7%
Change for the 12 months
11.7%
Change for the 12 months
to November 2020 to November 2020 to October 2020 to November 2020
Total New Zealand dairy Australia dairy exports EU (including UK) dairy US dairy exports
exports increased by 8.7%, increased by 6.9%, or exports decreased by 9.5%, decreased 3.1%, or 6,189 MT, in
or 32,823 MT, in November 4,415 MT, in November or 49,277 MT, in October November compared to the
compared to the same compared to the same compared to the same same period last year.
period last year. period last year. period last year. Exports volumes decreased
Record volumes of WMP to This was primarily driven by This was driven by decreases for the first time in over a year.
China and South East Asia of increased demand for fluid in SMP to Saudi Arabia, This was led by lower demand
31,421 MT led this increase. milk products and WMP, up infant formula to Hong Kong for SMP from South East Asia
This was offset by decreases a combined 6,329 MT, and and Russia and butter to and for cheese by Mexico.
in butter and fluid milk partially offset by decreases the United Arab Emirates Demand for whey from
products, down a combined in infant formula, down and Morocco. China continued to increase,
6,852 MT. 2,306 MT. attributable to recovering
Exports for the 12 months hog herds.
Exports for the 12 months Exports for the 12 months to October were up 2.7%, or
Exports for the 12 months
to November were down by to November were down 152,175 MT, on the previous
to November 2020 were
2.3%, or 81,486 MT, on the 2.2%, or 16,430 MT, on the comparable period. Fluid
up 11.7%, or 262,870 MT, on
previous comparable period. previous comparable period. milk products, cheese, butter,
the previous comparable
This was primarily driven by whey and WMP were the
Declines were recorded period driven by SMP, whey
butter, infant formula, SMP, main drivers of this growth,
across a broad range of and WPC, up a combined
and cheese. up a combined 299,504 MT.
products with infant formula, 248,998 MT.
It was partially offset by a
cheese, WMP, SMP, down
large decline in SMP down
a combined 35,353 MT,
163,387 MT.
partially offset by fluid milk
products, up 11,099 MT.
3
OUR MARKETS
Global Imports
China imports continue to
increase and Latin America
monthly imports also up.
Decline in Middle East and
To view a chart that
illustrates year-on-year
Africa and Asia imports
changes in imports –
CLICK HERE
LATIN AMERICA ASIA MIDDLE EAST & AFRICA CHINA
2.6%
Change for October 2020
4.0%
Change for October 2020
12.0%
Change for October 2020
10.0%
Change for November 2020
compared to October 2019 compared to October 2019 compared to October 2019 compared to November 2019
2.2 %
Change for the 12 months
3.0%
Change for the 12 months
3.8%
Change for the 12 months
10.4%
Change for the 12 months
to October 2020 to October 2020 to October 2020 to November 2020
Latin America dairy Asia (excluding China) Middle East and Africa China dairy import
import volumes¹ increased dairy import volumes¹ dairy import volumes¹ volumes increased by 10%,
2.6%, or 3,941 MT, in October decreased 4.0%, or 15,381 MT, decreased 12.0%, or or 28,565 MT, in November
compared to the same period in October compared to the 31,383 MT in October 2020 compared to the same
last year. same period last year. compared to the same period period last year.
Decreases were recorded for last year. Import volumes of fluid milk
This was driven by higher
volumes of WMP to Brazil WMP to Vietnam, Hong Kong Decreases were driven products, up 23,401 MT, from
but partly offset by lower and Singapore, and whey to principally by lower volumes Germany and New Zealand
shipments of SMP to Mexico. Indonesia. This was partially of infant formula and SMP continued to increase as
offset by an increase in to Nigeria and fluid milk dairy consumption is widely
Imports for the 12 months to cheese to Japan. promoted to boost immunity.
products to Kenya.
October were down 2.2%,
Imports for the 12 months to Whey imports were also up
or 38,998 MT, compared Imports for the 12 months
October were down 3.0%, or 19,739 MT, primarily from the
to the same period the to October 2020 were
147,838 MT, compared to the US as China continues to
previous year. down 3.8%, or 149,867 MT,
same period the previous year. rebuild its hog herds using
compared to October last
Decreases were driven Decreases were recorded whey as feed.
year driven by decreases in
primarily by SMP, infant across WMP, SMP and Imports for the 12 months to
fluid milk products, infant
formula and butter, down fluid milk products, down a November were up 10.4%, or
formula and cheese, down
a combined 58,702 MT and combined 187,680 MT, and 325,647 MT, driven by whey,
a combined 331,774 MT, and
partly offset by increased offset partially by increased fluid milk products, butter
partially offset by increases
volumes of cheese and WMP. volumes of lactose, up and lactose.
in SMP.
48,282 MT.
1 Estimates are included for those countries that have not reported data.
4OUR MARKETS
Fonterra Milk Collection
New Zealand Milk Collection
90
VOLUME (M LITRES/DAY) 75
60
45
30
15
To view a table that shows our
detailed milk collection in New
Zealand and Australia compared 0
JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY
to the previous season –
2020/21 2019/20 2018/19
CLICK HERE
NEW ZEALAND NORTH ISLAND SOUTH ISLAND AUSTRALIA
0.7%
Change for December 2020
0.6%
Change for December 2020
0.7%
Change for December 2020
1.3%
Change for December 2020
compared to December 2019 compared to December 2019 compared to December 2019 compared to December 2019
0.7%
Season to date
0.6%
Season to date
1.0%
Season to date
2.2%
Season to date
1 June to 31 December 1 June to 31 December 1 June to 31 December 1 July to 31 December
Fonterra's New Zealand North Island milk South Island milk Fonterra's Australia
collection for December collection in December collection in December collection in December
was 183.1 million kgMS, was 105.8 million kgMS, was 77.3 million kgMS, was 111.4 million kgMS, a
down 0.7% on December down 0.6% on December down 0.7% on December 1.3% increase on December
last season. last season. last season. last season.
Above average rainfall and
Season-to-date collection to Season-to-date collection Season-to-date collection
cooler conditions, driven by a
the end of December was was 560.9 million kgMS, was 342.0 million kgMS,
La Niña weather pattern have
902.8 million kgMS, down down 0.6% on last season. down 1.0% on last season.
assisted milk production
0.7% on last season. At the end of November, moving into summer.
Weather was mixed in
season‑to‑date collection
The poor pasture conditions December, with areas Season-to-date collections are
was 264.6 million kgMS, 1.1%
experienced in some areas in the top half of the down 2.2% on last year due
behind last season.
in early November turned Island starting with above to an unseasonally wet spring
around with production at average temperatures and Snow fell in some regions and lower herd numbers which
near normal levels by later dry conditions, whereas mid-month, followed by a hampered milk volumes across
in the month. December southern parts were much cold and wet spell for eastern peak months.
saw a wide range of weather wetter than average. parts. The upper South
conditions across the Island also saw some heavy
country but indications of rain, before more settled
good levels of conditions prevailed for most
supplementary feed areas as the month ended.
production across most
parts of the country.
5OUR MARKETS
Fonterra Global Dairy Trade Results
Fonterra GDT results at
last trading event
19 January 2021:
5.1% USD
3,629 28.6000’ MT
Change in Fonterra’s Fonterra’s weighted Fonterra product quantity
weighted average product average product price sold on GDT
price from previous event (USD/MT)
AMF SMP BUTTER
17.3%
USD 5,398/MT
7.3 %
USD 3,295/MT
4.6%
USD 4,735/MT
WMP CHEDDAR
2.2%
USD 3,380/MT
0.1%
USD 4,082/MT
Fonterra GDT sales LATEST AUCTION FINANCIAL
by destination: YEAR‑TO‑DATE
NORTH ASIA (INCLUDING CHINA)
SOUTH EAST ASIA
To view more information, MIDDLE EAST AND AFRICA 28,553 387,575
including a snapshot of the MT MT
LATIN AMERICA
rolling year-to-date results –
OTHER
CLICK HERE
The next trading event will be held on 2 February 2021. Visit www.globaldairytrade.info for more information.
Dairy commodity
1,150 0.76
prices and New
Zealand dollar trend
1,075 0.71
The New Zealand dollar
PRICE INDEX
NZD / USD
appreciated during November
1,000 0.66
and December driven by
broad-based US dollar
weakness and supported by 925 0.61
robust commodity prices. By
early January the NZD peaked
850 0.56
above 73 US cents before JAN 19 MAR 19 MAY 19 AUG 19 OCT 19 JAN 20 MAR 20 MAY 20 AUG 20 OCT 20 DEC 20
settling just below 72 US cents. GDT PRICE INDEX NZD/USD SPOT RATE
6Our Performance
Darfield site adds new Strong global demand for “We have great flexibility “I grew up rural in
shift to meet cream our cream cheese has seen here at the plant that Whakatane and knew the
Fonterra’s Darfield site in enables us to dial up or down culture and lifestyle of the
cheese demand Canterbury hire a full shift the firmness and consistency industry would work for us as
of new recruits as the team of cream cheese to meet we have a young family.
ramps up production. customer preference and
“The opportunity came up
the great job our farmers
Cream Cheese Plant in the cream cheese plant
are doing in delivering top
Manager, Blake Aston says, and having spoken to a few
quality milk,” Mr Blake said.
“We have employed five people I was really excited
new employees for the shift, Mr Blake said that with to join the team. It’s a
and they’ll work alongside COVID-19 bringing small team but a modern
the three other shifts at uncertainty to the job plant and a cool product
the plant. market, it’s great to see that that I’m looking forward to
Fonterra is able to offer new working with.”
“The team is seeing
opportunities for people
record monthly sales for Fonterra's Darfield site
looking for work. One of
cream cheese. Demand is was established in 2012
those new employees is
predominately coming from and employs more than
Liam Fitzgerald, who spent
China as we continue to see 280 people.
eight years working as an
increased interest in pasture-
international pilot at Air
fed milk from New Zealand.”
New Zealand until COVID-19
The cream cheese is going hit the aviation industry.
into a range of different
“About 15 years ago I worked
products, from cheese
for Fonterra at Edgecumbe.
lollipops to traditional
Recently, when my flying
Chinese pastry like
career came to a halt
moon cakes.
unexpectedly, I spoke to my
wife about returning to the
dairy industry.
New employee, Liam Fitzgerald and Cream Cheese Plant Manager, Blake Aston
7Our Co-op
Promising plantain Fonterra and Nestlé are The new collaboration is The project also focuses on
trial looking good for teaming up with DairyNZ helping to accelerate uptake improving understanding of
to expand a promising of Ecotain – a blend of how farmers can implement
the planet plantain trial to help improve environmentally functional Ecotain successfully and
waterways and reduce plantain cultivars developed engaging farmers through
on-farm greenhouse gas by seed company Agricom. workshops, events and a
(GHG) emissions. Currently, 50 Tararua farms national farmer network to
have started to use plantain, extend knowledge.
Incorporating certain
through DairyNZ’s Tararua
varieties of plantain into a As the industry good
Plantain Project. With the
cow’s diet has been shown body representing dairy
funding boost from Fonterra
to reduce the nitrogen farmers, DairyNZ invests
and Nestlé, it’s expected
concentration in their urine, significantly in sustainability
these farms and more will
which can leach through soil research. DairyNZ’s General
increase the amount they
into groundwater. To test the Manager for New Systems
grow, therefore maximising
benefits in local pastures, and Competitiveness,
the benefits.
DairyNZ has been leading David McCall, says the
the Tararua Plantain Project Ecotain has been used in dairy sector has a wide
in the lower North Island, studies by DairyNZ, Agricom, range of work underway
where farmers have been Lincoln University, Massey to reduce nitrates entering
growing the leafy herb for University and AgResearch, waterways and reduce
their cows. The Ministry for with results showing it can on‑farm emissions.
Primary Industries is also significantly reduce nitrogen
“The seven-year Tararua
involved as a key contributor. leaching. Preliminary studies
Plantain Project is a flagship
also show it has the potential
Now, Fonterra and Nestlé project for the dairy sector.
to lower on-farm greenhouse
are helping expand the It is delivering real, tangible
gas emissions through the
project further through results valued by farmers.
reduction of nitrous oxide,
additional funding and by The project has community
which is promising news
sharing expertise. at its heart as it seeks water
for farmers.
quality improvements,
“We’re all about finding
Nestlé, the world’s largest while ensuring the dairy
ways to ensure Aotearoa
food company and a sector continues as an
New Zealand has a thriving
customer of Fonterra’s, was economic pillar within the
environment and a thriving
keen to be involved in the local community.
farming economy,” says
Tararua project given the
Fonterra’s Director of “It is excellent to have extra
commitments it has made
On-Farm Excellence support from Fonterra and
around sustainability.
Charlotte Rutherford. Nestlé within the Tararua
“Working with our suppliers catchment,” says Dr McCall.
“We can achieve more by
and others is critical for
partnering with others, so
achieving Nestlé’s target of
it’s great to join forces with To view more information
net zero carbon emissions
DairyNZ and Nestlé. This about the Tararua
by 2050. Reducing on-farm
is helping to speed up the Plantain Project –
greenhouse gas emissions
adoption of plantain by
and protecting waterways
farmers. Ultimately it could
will help us get there and
be a real game-changer to
we’re pleased to partner with
CLICK HERE
reduce nitrogen from cows
Fonterra and DairyNZ on
and help mitigate nitrous
this initiative,” says Nestlé’s
oxide emissions.”
Robert Erhard.
8Supplementary Information
Global Dairy Market PRODUCTION
The charts on the right 1,000
illustrate the year-on-year
changes in imports, exports 800
and production for a range of
LIQUID MILK (M LITRES)
countries that are important 600
players in global dairy trade.
400
The absolute size of
the bars represents the 200
change in imports, exports
or production, relative 0
to the same period the
previous year. -200
JAN 20 FEB 20 MAR 20 APR 20 MAY 20 JUN 20 JUL 20 AUG 20 SEP 20 OCT 20 NOV 20 DEC 20
Averages are shown where
NEW ZEALAND EU/UK UNITED STATES AUSTRALIA AVERAGE
data is complete for the
regions presented. NOTE: Data for EU/UK and Australia to November; New Zealand and US to December.
BACK TO SUMMARY EXPORTS
200
160
120
MT (000s)
80
40
0
-40
-80
DEC 19 JAN 20 FEB 20 MAR 20 APR 20 MAY 20 JUN 20 JUL 20 AUG 20 SEP 20 OCT 20 NOV 20
NEW ZEALAND EU/UK UNITED STATES AUSTRALIA AVERAGE
BACK TO SUMMARY NOTE: Data for EU/UK to October; New Zealand, Australia and US to November.
IMPORTS
180
120
60
MT (000s)
0
-60
-120
-180
DEC 19 JAN 20 FEB 20 MAR 20 APR 20 MAY 20 JUN 20 JUL 20 AUG 20 SEP 20 OCT 20 NOV 20
ASIA CHINA MIDDLE EAST & AFRICA LATIN AMERICA AVERAGE
NOTE: Data for Asia, Middle East & Africa and Latin America to October; China to November.
BACK TO SUMMARY
SOURCE: Government milk production statistics/GTIS trade data/Fonterra analysis.
9Supplementary Information
Fonterra milk MILK COLLECTION DECEMBER DECEMBER MONTHLY SEASON- SEASON- SEASON-
(MILLION KGMS) 2020 2019 CHANGE TO-DATE TO-DATE TO-DATE
production 2020/21 2019/20 CHANGE
The table on the right
Total Fonterra 183.1 184.3 (0.7%) 902.8 909.7 (0.7%)
shows Fonterra milk solids
New Zealand
collected in New Zealand
and Australia compared North Island 105.8 106.4 (0.6%) 560.9 564.3 (0.6%)
to the previous season.
South Island 77.3 77.9 (0.7%) 342.0 345.4 (1.0%)
BACK TO SUMMARY Australia 11.4 11.3 1.3% 59.0 60.3 (2.2%)
Fonterra GDT results LAST TRADING EVENT YEAR-TO-DATE
(19 JANUARY 2021) (FROM 1 AUGUST 2020)
This table provides more
information on the latest Quantity Sold on GDT 28,553 387,575
results, including a snapshot (Winning MT)
of the year-to-date results.
Change in Quantity Sold on GDT (10.3%) (8.9%)
over same period last year
Weighted Average Product Price 3,629 3,201
(USD/MT)
Change in Weighted Average 4.7% (5.3%)
Product Price over same period
last year
Change in Weighted Average 5.1% –
Product Price from previous event
Fonterra GDT results 3,700 39,000
WEIGHTED AVERAGE PRICE (USD/MT)
This chart shows Fonterra
GDT prices and volumes over 3,500 34,000
QUANTITY SOLD ( MT)
the past 12 months.
3,300 29,000
3,100 24,000
BACK TO SUMMARY 2,900 19,000
2,700 14,000
FEB 20 MAR 20 APR 20 MAY 20 JUN 20 JUL 20 AUG 20 SEP 20 OCT 20 NOV 20 DEC 19 JAN 21
WEIGHTED AVERAGE PRICE QUANTITY SOLD
10Glossary
AMF kgMS Season
Anhydrous Milk Fat. Kilogram of milk solids, the New Zealand: A period
measure of the amount of of 12 months to 31 May
BMP fat and protein in the milk in each year.
Butter Milk Powder. supplied to Fonterra.
Australia: A period of
DIRA MENA 12 months to 30 June
in each year.
Dairy Industry Restructuring Middle East – North Africa.
Act 2001 (New Zealand).
MPC SMP
Farmgate Milk Price Skim Milk Powder.
Milk Protein Concentrate.
The price for milk supplied in WMP
New Zealand to Fonterra by Non-Reference Products
Whole Milk Powder.
farmer shareholders. All dairy products, except
for Reference Products, WPC
Fluid Products produced by the NZ
Whey Protein Concentrate
The Fonterra grouping Ingredients business.
of fluid milk products
(skim milk, whole milk NZMP
and cream – pasteurised New Zealand Milk Products.
or UHT processed),
concentrated milk products Reference Products
(evaporated milk and The dairy products used
sweetened condensed milk) in the calculation of the
and yoghurt. Farmgate Milk Price, which
are currently WMP, SMP,
GDT BMP, butter and AMF.
Global Dairy Trade, the
online provider of the twice
monthly global auctions of
dairy ingredients.
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